Volkswagen delayed public admission on emissions cheating in hopes of reducing its fine

It has been claimed that Volkswagen held back on a public announcement regarding its emissions testing cheating scheme because it wanted to negotiate a more manageable fine with the US governemnt.

Reuters has seen a 113-page report that Volkswagen has submitted in its defence to the Braunschewig local court. The lawsuit was brought against the automaker by angry shareholders, who claim that the automaker breached German disclosure laws by not publicly admitting the emissions cheating scheme earlier.

The report states that Volkswagen’s board were lead to believe that a “consensual solution” could be brokered with US authorities and that it “would not have led to significant economic consequences for VW”.

Volkswagen will argue in court that the “temporary non-disclosure did not serve the purpose of covering up the breach of compliance”, and that such behaviour was both legal and in its best interests.

Last week, Volkswagen issued a three-page public statement outlining the company’s defence in the case. In the statement, Volkswagen said that, in a meeting on September 3, it had confessed to US regulators that it had used emissions testing defeat devices.

On September 18, the United States’ Environmental Protection Agency (EPA) went public with the matter, revealing that nearly half-a-million Volkswagen and Audi vehicles sold in the US during the 2009 to 2015 model years contained “software that circumvents EPA emissions standards” for oxides of nitrogen (NOx).

Globally and across the Volkswagen Group, the emissions testing defeat device is believed to have been installed in around 11 million vehicles.

Under US law, the company could be a fined or sued for a maximum of US$48 billion ($66 billion) by the government. It should be noted that, at the turn of the century, the US government sued Toyota for roughly US$58 billion ($80 billion) — the two parties eventually settled out of court, with Toyota coughing up around $34 million ($47 million).

In last week’s public statement, Volkswagen also admitted that Martin Winterkorn, its former CEO, was informed as early as mid-2014 of the emissions cheating scheme used in its EA189 turbo-diesel engine family.